The Treasury Department says Judy Shelton will become a counselor to Bessent to advise on currency policy, “with a particular focus on evaluating financial conditions in China.”

"It would necessarily be painful." Chicago Fed President Austan Goolsbee says the central bank has reached the limit of any ability to wait out supply shocks, which means higher interest rates will have to slow sectors of the economy that may not be driving up prices. He also sees evidence that the AI investment boom is not "staying in its lane," and cites conversations with businesses who see increasing labor-market pressures for AI-adjacent industries. https://t.co/pvKJBzbRpQ

Fed governor Michael Barr: the AI boom and tariff- and energy-related price pressures have contributed “upward price pressures.” Given rising inflation risks and receding labor market risks, “we were out of position, and we made an adjustment in the right direction.” “In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.”

This paper finds that 90% of the observed rise in the 10-year US Treasury since August 2020 has occurred in the three-day window around US payroll reports or speeches by top Fed officials (the chair, vice chair, or Waller), which accounts for just 24% of trading days The paper finds those days are responsible for 81% of the rise in markets' expected average short-term rate over the next 10 years, which means this isn't about investors getting nervous about holding long-term debt and is instead about markets revising their view of short-term rates.

Trump spent months attacking the Fed for keeping rates too high, but after it raised them Wednesday, he cast himself as having blessed it in a call to Fed Chairman Kevin Warsh in the days before the decision. The truce is the clearest sign yet that Warsh has, for now, reset a relationship in which the White House treated the central bank as an adversary. The risk is that it lasts only until the Fed raises rates again. Trump's account of a hostile committee could leave investors wondering whether Warsh is leading the Fed or being carried along by it. Some observers see a face-saving exercise by Trump while others wonder about a dangerous equilibrium: A White House that actually believes the increase, and any that follow, are being forced on Warsh could invite the administration to attempt to remove officials it thinks are obstructing him. w/@schwartzbWSJ https://t.co/UX6F2UmQF6

Trump repeats his long-held view that sovereign borrowing costs should be more like a corporate: The better credit should have the lowest rates. https://t.co/BLEOuS7rkN

An AI boom holding up equities. Prediction markets. Exotic options. A bond market with more government policy activism. The Journal is hiring an editor to lead our Markets team through all of it. It's the coolest seat in financial journalism.

Greenspan raised rates a week before the GOP convention in 1988. https://t.co/x5cUkGKFIB https://t.co/qEnThGmfGC

Core PCE projections for August are centered around 0.25%-0.28%, which would be the same as July and slightly below the 0.29% rise in core CPI. Note: these have bigger uncertainty bands than they normally do given the upcoming NIPA revisions https://t.co/PlIpmtFvWa

Core services ex-housing rose 0.51% in the August CPI, the highest reading since January and up 3% on the year. Core goods was +0.11% (+0.7% on the year) Shelter was +0.26% (+3% on the year) https://t.co/YT36CcYUvN